NEWPORT BEACH — The California Coastal Commission recently warned the owners of Banning Ranch that someone may have illegally graded land, cleared brush and stacked construction materials in areas with rare plants and animal species.

A contractor working on a utility project there between 2004 and 2006 may have violated the Coastal Act when he didn't get permits for earth-moving and other actions, according to a Coastal Commission letter written earlier this month. The letter was sent to the owners of Banning Ranch, the city, Southern California Edison and Edison's subcontractor that worked there.

If the Coastal Commission finds the area in question was "environmentally sensitive habitat," then the property owners, including the city, could be required to restore the land exactly where it was degraded.

This could hamper development plans at the site — especially those for the city's proposed sports park, which relies on an access road to be built on one of these areas.

"Nobody saw this coming," said City Atty. David Hunt. "It's possible it could throw a wrench in the access road and cause a complete reconfiguration of Sunset Ridge Park."

Some of the areas affected may have been a breeding and foraging ground for a threatened bird species, the California gnatcatcher, according to Coastal Commission enforcement analyst Andrew Willis.

"Any of their habitat is critical," he said.

Scientists found gnatcatchers and native coastal sage scrub, including a rare subset called the maritime succulent scrub, during previous environmental assessments, Willis said.

Removing plants and altering the land by dumping gravel and other building materials requires a coastal development permit, according to the letter.

The habitat was on three separate pieces of land — two on the Banning property and one on the Newport Beach park property.

Newport purchased that land in 2006, after the land clearance took place, according to the city. The property is slated for Sunset Ridge Park, a 13.7-acre parcel with two soccer fields and a baseball diamond. After much debate about the park's design, the City Council approved its plans in 2008.

One especially controversial aspect of the park is an access road coming off Coast Highway that the council approved in April. Now, it turns out that the road is planned to traverse one of the contested areas.

The Banning Ranch Conservancy, a group working to preserve Banning Ranch as open space, sued Newport Beach over the environmental documents for the access road in April. Its lawsuit is unrelated to the Coastal Commission action. The conservancy argues that road is really for the 1,375-home development, and that the city should build the park without it.

"We don't think the city should be able to build the road there for a number of reasons," said Terry Welsh, Banning Ranch Conservancy president. "We think that area is environmentally sensitive and it should not have a road going through it."

Welsh said the conservancy brought up the cleared areas in response to the city's environmental documents about the road, but that it did not specifically tip off the Coastal Commission.

The commission's letter said officials noticed the cleared land after reviewing aerial photographs, and then confirmed it by visiting the site.

"At the site, staff observed graded areas where native vegetation had been removed and destroyed," the letter said.

Now, the city and the other land owners are negotiating with the Coastal Commission to restore the habitat.

"We want to do everything we can to comply with the Coastal Plan as long as we can build our park," said Hunt.

One option that the city is pushing for is to restore the land in a separate 3.2 acres it has set aside for habitat restoration.